Raise my 401(k) contribution to a level that will max out my yearly contribution (lowering my AGI) and pay expenses with some the win?==========>>No I do not think so; Your gambling winnings of $93K are reported as "gambling winnings" on 1040 Line 21. Gambling winnings are not earned income for any purpose. You cannot make any contribution to an401KUNLESS your income is earned taxable income.
Although you cannot use this amount toward your 401K contribution, you will not have to pay Social Security or Medicare taxes, FICA taxes I mean, on it. As you received enough income during the year to owe more than a certain amount(depending on each state) income tax that isn't paid through withholding, then you must make estimated tax payments. You can avoid underpayment estimated tax penalty if You have paid in at least 90 % of your tax for the current year, or You have paid 100%of your prior-year tax, whichever is lower.
Pay the 6% penalty and then not contribute next year? Any other ideas? ==>. As mentioned above; I guess you need to contac a retirement admin for more info in detail on your issue.